Pertamina spokesman M Harun in a press statement received here on Saturday said the MoU was for a joint study of the feasibility of the project which would later be integrated with a petrochemical plant.
"After the signing, an executive team will go to the next stage of joint study including market research and economic analysis as well as refinery configuration study," he said.
The signing was done in Bali by Pertamina`s director of investment planning and risk management, M Afdal Bahaudin and the vice president of marketing, supply and joint venture coordination of Saudi Aramco, Dawood M Dawood.
Saudi Aramco would supply part of the crude for the refinery based on a long-term contract.
The refinery will produce petrochemical products and high quality gasoline to meet demand that keeps increasing in the country and in the Southeast Asian region.
"The investment cooperation with Saudi Aramco is very useful for Pertamina and Indonesia to strengthen gasoline and petrochemical supply to meet huge domestic and regional demand," he said.
He said the project was part of Pertamina`s plan to increase the country`s energy resilience.
Dawood meanwhile said the signing of the MOU was the first important step to deepen the relations with Pertamina and also part of a strategy to increase downstream business existence globally.
"We are committed to mutually beneficial investment that will benefit both parties and contribute to economic and development growth," he said.
Saudi Aramco Asia Company Limited (SAAC) is a subsidiary of Saudi Arabian Oil Company (Saudi Aramco).
SAAC`s business is aimed at supporting Saudi Aramco`s business operations in Asia.
Saudi Aramco meanwhile is fully owned by the government of Saudi Arabia and headquartered in Dhahran, Saudi Arabia.
The company manages the world`s biggest proven oil reserves totaling 260 billion barrels and the world`s fourth biggest gas reserves.